VT Life & Health flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

McCarran-Ferguson Act

1945 federal law confirming that states have primary authority to regulate insurance; it exempts insurance from most federal antitrust law as long as state regulation exists.

Admitted insurer

An insurer holding a license from the state insurance department to transact business there, meeting solvency, rate, and form requirements and backed by the state guaranty association.

Certificate of authority

The license issued by a state insurance department that authorizes an insurer to conduct insurance business in that jurisdiction.

Unfair trade practice: rebating

Offering any inducement not stated in the policy, such as cash or commissions, to persuade a buyer to purchase insurance; it is prohibited in every state.

Law of large numbers

The principle that the more similar exposure units are pooled, the more closely actual losses match predicted losses, making future premiums more predictable and stable.

Insurable interest

A financial or love-and-affection relationship with the insured such that the buyer would suffer a loss from that person's death; it must exist at policy issue.

Moral hazard

A condition of character or behavior, such as dishonesty, that increases the likelihood of loss and makes an applicant less acceptable to an insurer.

Pure risk

A situation offering only loss or no loss, with no chance of gain; insurance is designed to handle pure risk rather than speculative risk.

Conditional receipt

A receipt giving temporary coverage from the date of application or medical exam, but only if the proposed insured proves insurable under the insurer's established rules.

Human life value approach

A method of sizing life insurance need by calculating the present value of the insured's future earnings that dependents would lose at death.

Reinstatement provision

Allows a lapsed life policy to be restored, usually within three to five years, by paying overdue premiums with interest and providing evidence of insurability.

Entire contract provision

States that the policy and the attached copy of the application form the whole agreement, and that only an authorized officer may modify it in writing.

Return of premium term

A level term policy that refunds all premiums paid if the insured survives the term; it costs more than ordinary term coverage.

Universal life Option B

A death benefit structure paying a stated amount plus the accumulated cash value, so the death benefit increases as the policy's cash value grows.

Waiver of premium rider

Waives policy premiums after the insured is totally disabled for a stated waiting period, usually six months, keeping the policy in force.

Guaranteed insurability option

Lets the policyholder buy additional coverage at stated ages or events without new evidence of insurability, at standard premium rates.

Exclusion ratio

The portion of each annuity payment that is a tax-free return of the annuitant's investment, computed as investment in the contract divided by expected return.

Accumulation units

Units used during the accumulation phase of a variable annuity to measure the contractholder's interest in the separate account's value.

Life income with period certain

An annuity payout guaranteeing income for life with a minimum number of payments; a beneficiary receives any unpaid balance if the annuitant dies early.

Annuitization

The irrevocable conversion of an annuity's accumulated value into a series of periodic income payments, at which point the contract value is liquidated.

Health maintenance organization

A prepaid managed-care plan providing care through a defined network, generally requiring a primary care physician referral before seeing a specialist.

Point of service plan

A managed-care hybrid allowing members to use network providers with small copays or non-network providers at higher cost with a deductible.

Medicare Part B

Optional federal medical insurance covering physician services, outpatient care, and durable medical equipment; funded by participant premiums and general tax revenue.

Coordination of benefits

Rules that determine which of two or more health plans pays first when a person is covered by both, preventing payment beyond total charges.

Guaranteed renewable policy

The insurer must renew the policy as long as premiums are paid, but may raise rates by class; coverage cannot be cancelled because of health changes.

Incontestability period

Typically two years after issue, during which an insurer may rescind a health policy for material misstatements; afterward the policy cannot be contested for misrepresentation.

Time of payment of claims

A provision requiring the insurer to pay approved benefits promptly, commonly within 30 or 45 days after receiving acceptable proof of loss.

Change of occupation provision

Reduces benefits if the insured moves to a more hazardous occupation, or permits a premium refund if the new occupation is less hazardous.

Vermont Department of Financial Regulation

The state agency regulating insurance, banking, and securities; its Commissioner licenses producers and insurers and enforces Vermont insurance law.

Vermont Health Connect

Vermont's state-based health insurance marketplace, where individuals and small businesses compare qualified health plans and apply for premium subsidies.

Vermont merged market

Vermont's single risk pool combining individual and small-group health plans, requiring insurers to apply one community-rated rate structure across both markets.

Vermont guaranty association

The Vermont Life and Health Insurance Guaranty Association, a nonprofit entity paying certain policyholder claims within statutory limits when a licensed Vermont insurer becomes insolvent.